Shopping spree may mean longer recovery

The first weekend after Thanksgiving Day is important to American retailers. It is traditionally the start of the Christmas shopping season. This year, this moment was anticipated, watched and analyzed a little more than usual. Even those of us who normally couldn’t care less what happened to America’s shoppers were interested. Last weekend could tell us our own fate in the next 12 months.

Well, from what I could gather from America’s major newspapers, it wasn’t so bad. In fact, shoppers took their shopping seriously. There were those who said they are shopping with gusto simply because it is Christmas and they wouldn’t let the Grinch in Afghanistan steal it from them. Some thought it was their patriotic duty to shop to jumpstart the economy. Others simply couldn’t resist a bargain. For one thing, the American oil companies are sharing the fall in energy prices with their consumers. American households are enjoying an additional $10 billion in spending money, or $100 a household, over the last five months, according to a consulting firm.

Still, observers say the volume of shoppers could have been better. The Thanksgiving weekend shopping crowd did not swell the way they did last year. "It is still unclear whether they will spend robustly enough to pull the economy from its downturn."

And bargains, they had plenty. As The New York Times puts it, "America is now on sale. Airlines and hotels are offering deep discounts. Carmakers are extending interest-free loans." Department stores have marked down prices sharply with discount stores like WalMart enjoying record sales.

Do we then have the beginning of good news? Economists say it is too early to tell. In fact, there are those who worry that there is a dark side to the deep markdowns in prices that shoppers are enjoying. "It could mean that the United States could suffer an extended period of declining prices, known as deflation."

There are those who worry that those bargain prices mean profit margins have been cut to the bone or even worse. Businesses seem overeager to convert inventory to cash at any cost. This may spell enough losses to force many businesses to begin yet another round of job cuts in 2002. It remains to be seen, analysts told The New York Times, whether the stores can make up in volume what they are losing in profit margins. Most analysts are doubtful. They worry that the extent of the price decreases betrays a serious oversupply of products.

Even if demand for their products begins to rise soon, businesses will not increase their investments again until they are using more of their existing capacity, economists say. Without a lot of new investments, any economic recovery is unlikely to be a robust one, according to analysts. That’s bad news for us in Asia. Our past rapid economic growth rode on the back of a robust, tech-driven American economy. If American businesses remain sidelined, so will we.

According to The New York Times, technology is probably the worse hit sector. Even without 9/11, "prices for computers and semiconductors have been falling for years, as advances have cut costs and manufacturers have become far more efficient." Over the past year, businesses sharply reduced their technology budgets. Businesses and individuals seem to have decided that they already owned all the equipment they needed for now. Hardware and software upgrades no longer excite as before.

That explains a lot of our problems... why the peso’s value is falling despite the start of the Christmas remittance season of the OFWs. Electronic products comprise about 60 percent of our exports and many of the semi conductor manufacturers have laid off workers as orders tapered off.

In the meantime, the American consumers will enjoy their season of bargains. Relatives abroad will probably confirm to us that they never had it this good as shoppers. If only they were not losing their jobs or worried about losing their jobs, this post 9/11 Christmas could even be merry. Tomorrow’s another day, anyway and no amount of worrying today can change that.

Tourism holiday

Maybe, just maybe, the long Christmas holidays that Tourism Secretary Dick Gordon wants to convert into a national tourism holiday may just perk up the general economy. But only if the local tourism industry makes an extra effort to keep the small segment of the population that can afford to travel to choose to travel here, rather than abroad.

The tourism industries abroad are making a special effort to entice people to travel to their countries. The other night, I saw a commercial of the US travel industry on CNN and BBC. I have never seen anything like that before. The Americans never needed to entice tourists to visit before 9/11. This quick reaction is remarkable. And they don’t even have a tourism secretary with a 5,000-strong bureaucracy.

Beyond advertising and promotions, they are offering good packages. The bargain holidays offered by airlines and hotels are definitely tempting. Dick’s problem is, it is still cheaper for a Metro Manila resident to go abroad than to go to Cebu, Boracay or Palawan.

There are bargain packages of less than $200 for Hong Kong. Bangkok is not that more expensive. And the killer Northwest roundtrip airfare of $299 plus 20,000 mileage points to Los Angeles and New York is difficult to beat. It only costs $199 plus points for a Honolulu ticket.

Luckily for Dick Gordon, not too many have Northwest mileage points and even then, there is now a long waiting list for the bargain fare. But even the more expensive Continental Airlines fare of a little more than $500 for a roundtrip Manila-Los Angeles ticket isn’t that bad either.

Given that we Pinoys don’t have to pay for hotel accommodations in the West Coast, courtesy of our relatives and friends, it may be cheaper to go to Los Angeles than to spend the holidays in a beach hotel in Cebu or Boracay. A reverse Balikbayan is now in the works. Just as well, since our US-based folks are too afraid to board an airplane to go anywhere these days.

So, Dick and the local tourism industry must try even harder to keep the locals home. At this late date, I have not heard of special packages to implement the holiday program announced by President GMA. This is typical of us – after enthusiastically talking about a seemingly bright idea, there is no follow through. Whatever happened to WOW Philippines?

As for me, I am terribly tempted to spend Christmas in Los Angeles this year. But I originally thought of going to Cebu. It is strange but the economics for the Los Angeles option do not look bad at all. It is the thought of a 14 to 16 hour flight with all those chaotic stopovers in Japan or elsewhere that is giving me second thoughts.

Parental moment

And now... here’s Dr. Ernie....

One day, a mom was cleaning her son’s room, and in the closet she found a bondage S&M magazine. This was highly upsetting for her. She hid the magazine until his father got home and showed it to him.

He looked at it, and handed it back to her without a word. She finally asked him, "Well, what should we do about this?"

The dad looked at her and said "Well, I don’t think you should spank him."

(Boo Chanco’s e-mail address is [email protected])